WoW's Future After Xbox Layoffs — Full Breakdown & Transcript

[00:02] question, is Warcraft safe? And I say this because Blizzard's owner, Xbox, have just hit the reset button on their business. And what that means is laying off 3,200 people, which is about 20% of their overall workforce. Now, half of

[00:17] [music] those, so 1,600, are already gone. A bunch of that's from Xbox course, will be going over the coming months. And you may have heard of five studios who are being let go. Well, those studios will have to either find

[00:31] their own ways as independents or be acquired by another owner. Now, you may think that most of the layoffs are within those studios because Xbox won't people anymore. From what we understand putting together

[00:44] the numbers, that is very much not the case. And many other studios have been gutted. In fact, [music] an MMO has had its team sliced in two. Now, Xbox's CEO, Asha Sharma, didn't specifically mention what cuts were happening at Blizzard,

[00:59] but they will likely be hit in some way. So, do we, as Warcraft players, have to be worried? Well, maybe, but also maybe not.

[01:11] Warcraft is essential to what they're doing, but that may feel less like a good thing and far more like uh the the Eye of Sauron. Okay. Let me explain then exactly what's happening.

[01:24] Jason Schreier, the best reporter in all things Blizzard, said that, quote, "Big cuts were coming to Xbox's studios and also to ZeniMax." Now, when Jason mentioned Activision Blizzard, he said that there were some cuts, but fewer

[01:37] necessarily mean that we over in Warcraft land are safe. So, here's far about the cuts that have happened. First, Obsidian, the acclaimed RPG studio. They've lost 25% of their staff, and they've lost an entire project.

[01:53] There was going to be an Avowed 2, which was a sequel to their own IP. That's going to be working on a new Fallout game. Now, you could sort of say, "Oh, that's common sense. Avowed wasn't super successful, and Fallout's a massive

[02:07] stagnating without a new game to go alongside the immensely popular television show." But, counter to common sense, well, the Fallout 76 team has actually been hit, losing, quote, "quite a few." Now, that

[02:22] few involves roles like, say, their quest lead and their head of season design. Hell, they've even lost their monetization director. Now, by all accounts, Fallout 76, while it was extremely controversial in the

[02:35] beginning, it actually did turn into quite the success [music] as time went on, especially because it was the only active Fallout game that was getting new series. Now, their ability to continue that is

[02:50] in jeopardy. So, it's a little strange. And what we consistently [music] see is franchises they're going to be putting more money into, but then we also see [music] cuts to those franchises. So, to continue that trend, they say they want

[03:04] more of The Elder Scrolls. So, to further that plan, naturally, Asha took the cleaver to The Elder Scrolls Online team. They've been chopped in half, and that is in spite of their new season one launching this week. It's quite weird,

[03:19] right? And when this news dropped, you know, people were still on a bit of copium. People were thinking, "Maybe they're just trimming some fat. Maybe it's okay. Maybe it's just non-core staff, and maybe the damage isn't that

[03:31] Well, then we saw who was actually laid off from these teams. Art directors, legendary writers, veteran designers with well over [music] 20 years of experience. And for an example of the impact, Kotaku sources say [music] that

[03:45] the remaining Elder Scrolls Online team are uncertain how the game will, quote, "continue to function." That's pretty rough. And over in the forums, their community manager already had to tell players to expect a change to the road

[03:59] map that exists for the game. But basically first, as a team they need to basically [music] need to see what they can make with the scraps that are left. But if you thought those two were bad, well the worst damage is to the rather

[04:11] legendary id Software. It's been completely gutted. Out of 185 staff, they've lost 136. One developer says they've been relegated to, quote, support studio status. That's fun news to get the day

[04:26] before the new Doom DLC was set to release. So, in some ways their logic seems clear, big picture, but in the details [music] it does become hard to follow. With one hand, we see Xbox supporting [music] more games for more

[04:40] of their major franchises, but with the other they're actively jeopardizing >> [music] >> parts of that plan. I mean, ESO and Fallout 76 were both understated [music] successes, carrying slow franchises, and

[04:53] bringing in a lot of steady players. I suppose like smaller World of Warcrafts, basically. That does sound bad, real bad. But amidst all that darkness, there is at least some good news for World of Warcraft. It does seem to be mostly

[05:07] safe. The WoW Game Makers Guild, which is the name of the union of World of stand in solidarity with all the impacted teams. Now, the implication is

[05:19] here that union members tended to go untouched. I mean, otherwise that post would have read a whole lot differently, right? They would have been talking about all of the losses that they had experienced. Now, we do know we've at

[05:31] least lost some Warcraft-related people, including some of their Chinese staff, but the overall immediate damage to WoW does seem to be minimal. And that's where we go to Jazz Chisholm, a man with lots of sources in Xbox, who does back

[05:43] this up, saying that there were, quote, comparatively minimal reductions. So, overall, I know it does sound really bad. But, of course, Xbox would say that there is a bit of logic in these cuts, and they do have a plan. Their plan is

[05:58] to double down on guaranteed successes. And this is where I want you to remember recently on the channel. It was the one that had two new Warcraft games, and it even had TV shows. Well, buried in all of the doom of this reporting, Jez

[06:14] actually helped confirm that leak. He relayed that he's heard about quote a range of TV and film projects at Blizzard. That's exactly the sort of thing that Xbox wants. So, with all of that covered, we now need to talk about

[06:28] World of Warcraft and where it can fit into this big picture of a new Xbox. The wild team will no doubt be feeling some survivor's guilt here, but between everything that I've covered and reading Ash's statements, you might even say

[06:43] that the future looks a little bright for Blizzard. And I know that could sound insane after everything that I just told you, but bear with me here. Xbox's reset is the conclusion to a very, very long saga. Essentially, years

[06:56] of massive investments not getting the results that Microsoft [music] wanted. ZeniMax, Activision Blizzard King, and a whole bunch of smaller studios was basically supposed to put Xbox on top. You see, Game Pass, their subscription

[07:09] service, was projected to be at 77 million subscribers by now. They bought all of those companies to fill Game Pass with content. Apparently, Game Pass is at 30 million right now, which is even lower than the

[07:23] previously 33 million number that had been reported. So, after giving all their studios years and many, many, many dollars, they've now decided to take a very different approach. Now, some would say that this is a long overdue

[07:37] correction for a failed strategy, a painful but necessary reset. I think there are parts of that logic that do actually make sense, but there's a lot of nuance that I really wouldn't want to bulldoze over. What matters though is

[07:51] that the reset has now happened and Blizzard have at least currently survived the worst of it. No news is often good news and that's especially true here. We haven't heard of any major team cuts or any projects at Blizzard

[08:03] being cancelled. And in mass layoffs, news like that is almost impossible to be leaks. So, ignoring the massive survivors guilt

[08:15] that everyone at Blizzard will feel, the immediate future would sound good. But of course it does. Ash's job is to convince us and [music] her bosses that the giant bonfire of Microsoft money has been put out and that this future is

[08:30] going to be good and that the pressing [music] the reset button is a very smart thing to do. And while almost all of us can see many of the points there, it's also the case that the future is not guaranteed and just dumping dump trucks

[08:44] of money onto a few big franchises is not always a recipe for success. So, all of this means if we want the truth, we need to read between the lines. Like say this line, quote, "I want Xbox to be one of the few companies that entertains

[08:58] of the few companies that entertains more than a billion people each day." Billion people, that's a direct quote from Ashish Sharma. Now, PC Gamer very helpfully pointed out that that is 24 times Steam. It's 83 times World of

[09:12] times Steam. It's 83 times World of Warcraft at its already Cataclysm peak and it's that playing every single day. Uh to put other numbers on it, it would be like having multiple Roblox level [music] successes. It's corporate rage

[09:24] as being executive nonsense at its absolute finest as if they're painting an impossible target so that they have the excuse to fire everyone when they don't meet that target. All while of course they would uh, out of the burning

[09:37] [music] will have reserved for themselves, as continually happens within this industry and corporate America more largely. It's been done before, it will be done again, but sadly, if they're going to pretend that

[09:51] well, we kind of have to do the same. Okay, how does Blizzard help Xbox get to a billion? Well, two words, Asia and

[10:04] mobile. To us, Diablo Immortal is a black mark from Blizzard's darker days, but to Xbox, it's a key part of their strategy. You see, last year, Blizzard's mobile director said that it's, quote, "doing

[10:16] exactly what we had envisioned. [music] More than half of our players are new to Blizzard and new to Diablo." So, hey, there you have it. It's growing the scale. Overwatch, then, is doing something similar. It's the only current

[10:31] avenue that Xbox has got [music] into South Korea. I wish I could talk about a great future for StarCraft that involved way more RTS [music] games, but I think But hey, if you're an Overwatch player, it's good that Overwatch is big in South

[10:45] Korea because Xbox basically has no market share there otherwise. And for a good reason as well, actually. Last year, Xbox's first-party titles were year, Xbox's first-party titles were under attack for missing translations.

[10:59] there, you should actually, you know, try and earn it. So, Blizzard basically gets Xbox a foothold in Asia that they just had found to be impossible [music] otherwise. Of course, that also includes

[11:12] China. China's so important to Blizzard that they're starting to look a bit like the favorite child given all of the cool promotions and unique bits of content Chinese [music] version. So, what we see

[11:24] here is that Xbox's core goal of growing their biggest franchises, it almost depends on the massive market and mind share that Blizzard's IP has. I do genuinely [music] believe that, but there is also an elephant in the room.

[11:37] And it's an elephant wearing a crown because as far as players go, well, King is the biggest wheel in the tricycle that is Activision Blizzard King. You see, the last time we saw them report monthly active users back before the

[11:51] buyout, their total was 371 million. 24 of those million were Blizzard, 107 were Activision, and then King made up the last little 240

[12:03] million, which is close to about 2/3 of their total. Now, when Xbox put almost 70 billion dollars on the table for ABK, I think it's fairly safe to say that most of that was for Call of Duty and

[12:17] for King. Blizzard may have been a bit of an afterthought, but even if it was, it was certainly protected. You see, King, as one of the strongest elements Activision and Blizzard from per-

[12:30] impulses [music] so far. Now, what happens to the ABK tricycle [music] whenever somebody comes in and steals one of its wheels? Well, that may but it's actually very direct what's happening. You see, Asha in her address

[12:47] said that two of Xbox's most important units now report directly to her. Those are Mojang, of course, the Minecraft people, and King, the Candy Crush people. She wants closer oversight of what they're doing, and the implication

[13:01] is, well, pretty obvious. They are massively popular, they're [music] wide audience plays that are the real key to her planned billion. Now, what worries me is that without King, that's, you know, Activision

[13:14] Blizzard. It's down to just two wheels on the tricycle. We all know how a perfectly fine, but only as long as they have momentum. And I say that because any dips in momentum, as the last few years have

[13:28] taught us, tend to be rewarded with deep, deep waves of layoffs and massive project cancellations. So, Asher pulling King away to her own side, in theory,

[13:40] little bit more vulnerable in the future. But so far, we've assumed that players. Technically, she just said that she wants to entertain a billion people. And with that in mind, suddenly Blizzard

[13:56] And with that in mind, suddenly Blizzard looks way, way more important, actually otherwise look if [music] it was only video games. And that lines up with the leak. A Warcraft Chronicles animated series alongside an RTS and an Arthas

[14:11] RPG with a live-action project. There is almost no better way to grow a gaming franchise's audience than, apparently, by making stuff for Netflix. And we really have seen this. Arcane, Cyberpunk, The Witcher,

[14:25] Castlevania, and Devil May Cry were all proof that it works, almost regardless of what the game is, and sometimes regardless of the show's quality. And something looks really cool on screen, you can get new fans, and some of that

[14:39] may be a lot of that will feed back into video game sales. We at least know that with, say, Witcher, Cyberpunk, and a few of the other ones that I mentioned, they actually did see massive spikes in both concurrent players and also [music]

[14:52] concurrent players and also [music] sales with the associated TV shows. So, if those gaming IPs translated that well to screen, then what would the rather legendary Warcraft be able to pull off? I would say, quite a lot.

[15:07] Okay, thus far in the video, you may be thinking, right. So, it seems that the tough time. They've hit the reset button. The cuts have been massive, and they've probably stung a lot more than people initially thought. But it seems

[15:21] like World of Warcraft and Blizzard are basically [music] safe. That is a reasonable enough rate, but it is now time for me to temper expectations a little bit here. Everything that I've said here is pretty

[15:33] much a best-case scenario. You see, successful reset or not, Microsoft are not a company known for giving their plans a lot of time to pan out. Their cuts this week have obliterated even the successful studios. That's because they

[15:48] just, well, don't have enough allowance from Papa Microsoft. It doesn't matter that Fallout 76 [music] and ESO were doing very well, or that Doom is a solid, reliable franchise. One that perhaps more importantly is made by a

[16:01] renowned, experienced development team that is also involved in id Tech, an absolutely outstanding engine that powers a bunch of games. No, all that stuff is gone. Why? Well, simply enough, they were not [music] printing infinite

[16:15] money, so they've got to be yoked. Every cent Microsoft can save [music] by clearing out Xbox can, of course, go into their massive AI expenditure instead, which of course they do believe will eventually bring more returns.

[16:29] of course, doesn't matter. They're responding to the market, and Xbox wasn't even the only thing that they cut. Microsoft themselves are dumping another 1,600 staff. So, with all that in mind, this reset more feels like

[16:44] Xbox's last-ditch attempt to save themselves. Now, of course, that's or Xbox themselves are faultless. Absolutely not. I mean, Xbox has been renowned for mismanaging studios for pretty much 20 years. They've never been

[17:00] good at it. They always could do better. ESO could have had more players. Fallout 76 probably should have been way more profitable. Doom's DLC could have reviewed higher than 86, I guess.

[17:14] But, the problem here is that perfection is not enough, because perfection doesn't really matter. What Microsoft wants is more product that they can look better. That can mean cutting things. That can mean focusing purely on

[17:28] what they think will do the most numbers. And that's why we should maybe also be a bit worried. You see, sometimes a company wants to make more money. Well, I guess all of the time. And that will often mean

[17:42] doubling down on the wins and cutting the losses. Fair enough, makes sense. Within the realm of video games, that can be really challenging. As an example, World of Warcraft, a long time ago now, say the days of Mists of

[17:55] Pandaria and Warlords of Draenor, World of Warcraft was actually working towards yearly expansions. And this was an infamously disastrous thing that kind of just led to them [ __ ] the bed and led [music] to problems like say the

[18:09] 14-to-15-month content drought after Siege of Orgrimmar. Of course, more recently we've seen a World of Warcraft that needs to ship more content. And that needs to ship more content. And that has, I think, pretty objectively

[18:21] not been good for the quality of that content [music] or the cohesiveness of the overall experience. So, that is to say, just because our favorite franchise might be seeing more money thrown at it, well, that may not mean that it will get

[18:36] actually play it entertained. And you can even hop over to the Activision side of ABK to see quite the [ __ ] show, actually. You see, they did this big kind of reboot of Call

[18:51] of Duty in 2019. And Call 2019 was a really, really good game. There were genuinely [music] impressive. And you know what? With Modern Warfare 2, Infinity Ward kind of did it again. But they hit problems. They hit development

[19:05] problems such that they basically cobbled together a Modern Warfare 3 out of nowhere purely so that they could have a release the next year. And what we effectively saw within that brand is that the yearly mandate of more content,

[19:19] more content, there always must be a boxed product there on time, it actually led to for one example, Call of Duty having an off year with Black Ops 7. An off year that, when combined with it

[19:33] being on Game Pass, hurt Xbox's revenue so much that it's almost certainly contributed to the cuts that we've been talking about today. All of that is to say that in one sense, being a pillar of the

[19:47] company does mean you'll get way more resources, but in many other ways, it does not mean that the actual quality of the product will be better. Quite often, it means the opposite. That does sound pretty demoralizing. I

[20:02] find it demoralizing. And speaking of, well, morale, there is the final and perhaps more painful point. Forget about the numbers for a second,

[20:17] >> and let's bring in the human dimension. Numbers do not make games. People make Numbers do not make games. People make games. Developers all across Xbox are now being asked to make a miracle happen, and with fewer staff than

[20:29] shown, even if they do pull off a miracle, that won't necessarily guarantee them a job. The reward for releasing content seems to be getting a live grenade thrown into your studio, or maybe at best, a stay of execution.

[20:45] Inevitably, that will hit morale. It will crush motivation. It will drain passion. And I have to be honest with you. When I executed the narrative of Midnight, how they've chosen to approach [music]

[20:58] Azeroth with this expansion, I feel so much less passion exuding from the game. They've sanded off the edges, they've leaned away from the things that made Warcraft an interesting verse. It more

[21:14] often than not feels like generic fantasy slop. That just makes me wonder if all this negativity has done that deep kind of damage that can't really be undone. Has it killed people's passion? Because

[21:27] if you've lost friends in your own studio or you're just working in a more depressing atmosphere, if you're always wondering will the next quarter bring another wave of cuts and will that hit me? Will that hit my family?

[21:40] You're not going to be able to do your best work. So, while Blizzard might not yet be getting ejected from an airlock, we may still have to brace ourselves for some change. There certainly will be content. I am not sure about the quality

[21:55] of that content. Maybe [music] not from a technical feature way, but perhaps do they give a [ __ ] about the world? Are they good at the world building? Are they good at giving Warcraft that sense of well being premium, being better than

[22:10] the industry? Or will it just feel like more and more [music] and more? I'm not sure, but almost certainly we should prepare for more monetization. Of to put in to try and chase away the inevitable

[22:26] If things don't get worse, that would be good, but it'll only be because of staff at Blizzard putting in Herculean amounts of effort. I don't know how much they'll get in return from that. And the saddest thing

[22:41] is sometimes you can put in a Herculean level of effort, but the end product may Now, I know we take a tough love approach in this channel. I feel like I responsible to you. I don't want to be sugarcoating things cuz if I'm doing

[22:55] that, I'm basically just an extension of Blizzard's corporate PR. Nobody wants really shouldn't. Perhaps the biggest takeaway for us, or thing that's like of years, is that World of Warcraft is a product

[23:09] of how it is made. It's a lot of structural things, and I have to assume that there are internal pressures that can be absolutely god damn smothering.

[23:22] So, let me answer the question I posed at the start of the video. Is Warcraft safe? Yes. Warcraft is safe. It is safe from the chopping block. It is safe from the immediate damage, but it is not safe

[23:35] from the immense pressure of Microsoft's ownership, and what that is exerting all the way down the chain through Xbox. All we can hope is that Blizzard find so much success with their current projects that Microsoft [music]

[23:50] cut other parts of the business instead, or feel happy giving Blizzard more autonomy. Certainly though, all eyes, even those within Microsoft, will be on BlizzCon. What they announce there might be the difference between life and

[24:05] If you want more detail on what we may see at BlizzCon, check out this video on the leaks I talked about. Of course, those are leaks that I believe are credible because they mentioned project code names before those code names were

[24:19] public. And the specific code name Camelot does come directly [music] from Blizzard servers. And of course, those leaks were also reinforced by Jez Corden. So, learn about that on this video next.